Here in the UK, many news stories we hear about Somalia are negative. Somalia is one of the world's riskiest places, alongside countries like Syria and the Democratic Republic of Congo. Twenty one out of the 28 countries that DFID works in are "fragile and conflict-afflicted". But today there was a good news story. Like 5 other DFID countries, Somalia is joining the New Deal for Peace, a commitment between the Somali government and the international community to work together towards lasting peace and development.
But what is this "deal" all about? One way of looking at it is as a safe space for countries like Somalia and organisations like DFID to actively manage development risks together.
Let me explain using a recent paper by the Overseas Development Institute (ODI). The paper divides the risks we see in development work into 4 types, each of which requires a different management strategy.
The first risk we deal with – in all countries – is delivery risk. Simply put, this is the risk of entire projects or programmes not working – for example if a lack of electricity in rural areas makes it impossible for students to use laptops that an organisation like DFID has distributed. Innovative programmes also face this kind of risk of failure. Managing this risk therefore requires actions like starting off new programmes as smaller "pilots" rather than launching them wholesale, or designing programmes so that they also invest in "systems", such as electricity to power laptops, security to avoid them being stolen, teacher-education to ensure they know how to use laptops, and so on. In a country like Somalia, investing in systems might mean bolstering security measures to help control militia, or creating jobs for young people that might otherwise join the militia. Wherever you are, ensuring "systems" work can help mitigate delivery risk. Many governments are looking at new instruments like Payments by Results (PDF, 55.85kb) and Development Impact Bonds which are being designed to help do so.
The second risk we face in development is fiduciary risk – including the potential for corruption or fraud. To manage this, DFID has due diligence procedures for organisations receiving aid (public or private), and tries to encourage more transparency of our aid and those organisations. We also do a lot of work to encourage broader openness and accountability to parliaments, the media and citizens of countries receiving aid. Thinking of examples close to home – corruption is less likely when politicians regularly appear on radio and TV to explain what they’re doing; or if there is an equivalent to the UK's National Audit Office, or tools like the Freedom of Information Act that journalists can use to dig deeper into suspicious activity. But obviously, these are harder to introduce in countries that are in or have just come out of conflict.
The third risk we deal with is context risk. This is the "law of unintended consequences" or to use a more well-known phrase "the road to hell is paved with good intentions". It's serious as it can lead to programmes being harmful in the long-term, but it's also difficult to identify early. A good example is provided in the book Poor Economics – where a project to help farmers get insurance inadvertently created a black market in cows ears (yes – it really happened!). Similarly, programmes targeted at one community can end up creating strife with a neighbouring community – which can escalate further if the targeted community is well represented in government, or if the country is in or emerging from conflict, like Somalia. Mitigating this kind of risk isn't easy. It requires local, objective staff to help design and evaluate programmes, and a lot of critical thinking. DFID staff often use special tools like A Theory of Change and Political Economy Analysis to help think through complex impacts.
Last but not least, development actors like DFID have institutional risks. This is when they don't necessarily share the same values or perspectives as the country or organisation they are working with. For example, DFID risks being admonished for helping a country that is not respecting human rights, not acting on climate change, not raising enough taxes and so on… The concern is that aid might actually hinder (often fledgling) governments from making difficult decisions, or worse yet help a government remain popular while it abuses a minority of its citizens. There are similar "ethical risks" to working with companies. This is a difficult risk to manage because it creates pressure on actors like DFID to add "conditions" to aid that might not be appropriate in the long-term. That said, there is a degree to which this might be legitimate – particularly if there are existing international agreements that countries or organisations have signed up to. That's why DFID has "Partnership Principles" with governments we work directly with, and we’ve recently introduced a code for non-governmental suppliers (PDF, 57.39kb). As a last resort, DFID can also channel aid through others – for example via multilateral agencies, non-governmental organisations or consultancies.
Working in fragile and conflict-affected states like Somalia is risky and it's complex. But risks need tackling and management for development to take place. This is why forums like the New Deal, the Open Government Partnership (which five DFID countries are members of) and the Global Partnership (which all twenty eight DFID countries and many non-state actors are part of) can be so helpful… They allow us all to have open, frank conversations about risks and make agreements to manage them.
The more we manage development risks together, through forums like today's New Deal, the more we will ensure aid is well spent, saves lives, and avoid the biggest risk of all – the risk of not engaging.